A. LAC0 STE CASES DETERMINED BY THE EXCHEQUER COURT OF CANADA. Coram GWYNNE, J. THE MERCHANTS BANK OF CANADA-SUPPLIANT.; 1881 AND Sept. 14. HER MAJESTY THE QUEEN . RESPONDENT. Slide and boom dues—C. S. Can. c.' 28-31 Vic., c. 12—Chattel mortgage —Parol agreement between Crown and mortgagor in possession--Agency of Mortgagor—Ratification by mortgagees. S., who was engaged in the lumber business, becoming indebted to the suppliants in a large sum of money, mortgaged to them by two separate instruments certain lumber, logs, and timber as security for the repayment of such indebtedness. The first mortgage was executed on the 18th December, 1876, and the second on the 11th May, 1877. By a collateral arrangement made at the time the first mortgage was executed, and by a proviso contained in the second indenture, S. was allowed to remain in possession of the property, and to attend to its manufacture and sale for the benefit of the suppliants. On the 15th day of May, 1878, S. became insolvent, but prior to such insolvency the suppliants had taken possession of the lumber, logs, and timber, and thereafter obtained a release of S.'s equity of redemption from his assignee. On the 6th June, 1877, while S. was in possession of the property in the planner above mentioned, by a letter addressed to the Minister of Inland Revenue he offered and agreed to pay the Government the sum of $2 per 1,000 ft. b.m. on all lumber to be shipped by him through the canals during the then current season, and also the whole amount of his indebtedness for canal tolls and clues then in arrears. This offer was accepted by the Government, and the agreement was acted upon by S, during the season of 1877,
2 EXCHEQUER COURT REPORTS. [VOL. I. 1881 In 1878, after the suppliants had taken possession of the property and MERCHANTSbegan to ship the lumber for themselves without paying the sum BANK OF agreed upon between S. and the Government, the collector of CANADA slide dues refused to allow such lumber to pass through the canals, v. and caused the same to be seized and detained until the amount THE QUEEN. due upon it in respect of said agreement was fully paid. Held:—(1). Under the provisions of the 7th section of the Petition of Right Act of 1876, the Dominion Government, in enforcing a parol agreement, is entitled to whatever rights any subject of the Crown would have in respect of such an agreement in au action between subject and subject. (2). Inasmuch as the provisions and enactments relating to tolls in 31 Vic., e. 12, are in substance and effect the same as those contained in chapter 28 of the Consolidated Statutes of Canada, under which the present regulations relating to timber passing through the slides were made, in virtue of the provisions of sec. 71 of 31 Vic., c. 12 such regulations are in effect to be construed as having been made under the later statute. (3). There being no re-demise clause or proviso in the mortgage of the 18th December, 1876, whereby the mortgagor might have remained in possession until default, the judge, sitting in the Court of Exchequer not as a court of appeal but in an Ontario case to administer the law of Ontario, was bound by the decisions in Mc-Aulay y Allen (20 U. C. C. P. 417), and Samuel y Coulter (28 U. C. C. P. 240), to hold that, upon the execution of such mortgage, the suppliants were entitled to immediate possession of the property granted thereby, and might, if they had pleased, at any time have exercised their right to sell thereunder without the mortgagor's intervention or consent. But, while the tenors of the second mortgage reserved to the suppliants the right to dictate into what description of lumber the logs should be manufactured, with whom alone contracts for the sale thereof might be entered into, and to whom upon sales it should be consigned, it was expressly provided therein that the business of such manufacture and sale should be transacted through the intervention of the mortgagor for the benefit of the suppliants. The effect, and intent of the second mortgage, therefore, was to make the suppliants principals and S., the mortgagor, their agent in carrying on the business thereafter with their property, and for their sole benefit, until the property should be sold or they were paid their claim. (4). As such agent S. must be held to have had sufficient authority to bind the suppliants by his agreement with the Government, which, under all the circumstances, was a reasonable and proper one and made in the interest of the suppliants,
VOL. I.] EXCHEQUER COURT REPORTS. 3 (5). But whether S. was, or was not, authorized to make such au agree-1881 ment with the Government, the suppliants adopted, ratified, and MLK CHANTS confirmed the agreement by acting under it and advancing moneys BANK OF to pay the Government in accordance with its ternis after they CANADA must be held to have had full knowledge of the nature and effect V. THE QUEEN. of it. Statement PETITION OF RIGHT for the release of certain or Facts. lumber, logs, and timber seized on behalf of the Dominion Government for alleged non-payment of slide and boom dues, and for the repayment of certain moneys alleged to have been paid under duress and in excess of any amount owed by the suppliants in respect of such dues. In their petition of right the suppliants allege, inter alfa: 1. The suppliants the said " The Merchants Bank of Canada " are a duly incorporated banking corporation, authorized by statute to carry on the business of bankers in the Dominion of Canada. " 2. For twenty years prior to his insolvency, James Skead, of the city of Ottawa, lumber merchant, carried on very extensive lumbering operations on the Ottawa river and its tributaries, and at the said city of Ottawa. " 3. For the purpose. of conducting the said lumber operations, the said James Skead became the owner of divers timber licenses to cut timber and logs on the timber lands of the Crown, bordering on the said Ottawa river and its tributaries. " 4. The said. James Skead from time to time cut timber and logs under the said licenses, and floated the same down the said Ottawa river and its tributaries in the usual manner. " 5. The said timber and logs, in the-course of their transit from the said timber lands of the Crown down the Ottawa river, passed through certain slides, booms and river improvements belonging to the Crown.
4 EXCHEQUER COURT REPORTS. [VOL. I. 1881 " 6. Under the Consolidated Statutes of Canada, MERCHANTS chapter 28, and the Act passed by the Parliament of Canada in the 31st year of Her present Majesty's ACNANKAvA V. reign, chaptered 12, and under certain orders-in- THE QUEEN• council and regulations passed in pursuance and Statement of Facts. un der the authority of the said statutes, the Crown was and is entitled to exact payment of certain tolls or dues (generally known as slide and boom dues) from the owners of all timber and logs passing through the said slides, booms, and river improvements, and to demand payment of the same in advance. Under the said statutes the Crown also appears entitled to certain special remedies for the collection of the said tolls or dues. " 7. By an indenture dated the 18th day of December, A.D. 1876, and made between the said James Skead of the first part, and the suppliants of the second part, the said James Skead granted and mortgaged to the suppliants certain lumber, logs, and timber therein particularly described to secure the repayment of his then indebtedness to the said suppliants, amounting to $136,560. - " 8. By another indenture, dated the 11th day of May, A.D. 1877, and made between the said James Skead of the first part, and the suppliants of the second part, the said James Skead granted and mortgaged to the suppliants the lumber, logs, and timber therein particularly described to secure the repayment of his then indebtedness to the said suppliants amounting to $334,147.66. " 10. On or about the 15th day of May, A.D. 1878, the said James Skead became insolvent within the meaning of the Insolvent Act of 1875, and amending acts, and at the instance of the Union Bank of Lower Canada, a creditor of the said James Skead for $500 and upwards, a writ of • attachment in
VOL. I.] EXCHEQUER COURT REPORTS. 5 insolvency was duly issued against him out of the 1881 County Court of the County of Carleton, the proper MERCHANTS court in that behalf, duly directed to Daniel Sutcliffe BCAxx or A N ADA Eastwood, of the said city of Ottawa, one of the official v. assignees of the county of Carleton, including the city THE QUEEN. of Ottawa, the proper official assignee in that behalf, sotra tFmnt and thereupon such proceedings were duly had and — taken under the said writ and acts, and at a meeting of creditors of the said insolvent James Skead, duly called and holden at the said city of Ottawa, on the 6th day of June, A.D. 1878, the said Daniel Sut-cliffe Eastwood was, by the said creditors, duly elected creditor's assignee to the estate and effects of the said insolvent under the said acts, and thenceforth became and continued to be, and now is the duly appointed creditors' assignee to the estate and effects of the said insolvent under the said acts. " 11. The said insolvent, at the time of his said insolvency, was indebted to the said suppliants in the sum of $286,027.59, which said indebtedness was then col-laterally secured by the indentures aforesaid, and the chattel property included therein. No part of the said indebtedness has since been paid or satisfied. " 12. Prior to the said insolvency, the suppliants took possession of all the lumber, logs, and timber in and about the Nepean mills and premises, and remained in possession thereof until, and were in possession thereof, at the time of the seizure hereinafter set forth. " 18. The suppliants duly proved for their said indebtedness against the estate of the said insolvent under the said insolvency, and duly valued their securities under the provisoes of the said insolvent acts at the sum of $160,000. " 14. On the 9th day of July, A.D. 1878, the creditors of the said insolvent at a meeting thereof, duly called for that purpose, duly authorized the said creditors' as-
EXCIIEQLJER COURT REPORTS. [VOL. I. 1881 signee to consent, and the said creditor's assignee did MEROlANTsthereafter duly consent to the retention by the sup- BAN of CANADA pliants of the securities mentioned in their said proof 'V. (including the indentures aforesaid) at the valuation THE QUEEN. aforesaid, under the provisions of the said insolvent Statement of Filets. acts. " 15. By virtue of the said indentures and of the said consent, all the said lumber, logs, and timber in, around, and about the said mill and premises in the township of Nepeau, known as the Nepean Mills, became, and are, the absolute property of the suppliants in equity as well as at law. " 16. Instead of exacting payment in advance of the said tolls and dues, payable by the said insolvent for the timber and logs from time to time passing through the said slides, booms, end river improvements, the Crown suffered and permitted the said timber and logs to pass through the said slides, booms, and river improvements without payment of the said tolls or dues, and suffered and permitted the said tolls or dues to fall greatly- in arrears, and gave time to the said insolvent for the payment of the same, and charged the said insolvent interest for the forbearance of the payment of the same, and from time to time took security from the insolvent for the payment of the same, and suffered and permitted the said insolvent to sell and dispose of vast quantities of the said timber and logs, and the lumber whereinto the same had been converted,without requiring payment of the said tolls or dues. " 17. According to a statement furnished since the said insolvency, to the suppliants by Alexander J. Rus-sell, who is the collector of slide dues and the Crown officer in charge of the Crown timber office at the said city of Ottawa, the Crown claimed that the said insolvent, at the date of his insolvency, was indebted to the Crown in the sum of $20,315, for arrears of the said
VOL. I.] EXCHEQUER COURT REPORTS. slide and. boom dues and interest thereon. By a subse- quent statement furnished to the suppliants by the said Alexander J. Russell, the said claim of the Crow was reduced by the sum of $4,879.69, and after de-ducting payments made since the said insolvency, the Crown now claims that there is due to the Crown for the said slide and boom dues the sum of $8,583.01. " 18. The suppliants aver that the proper slide and boom dues on lumber, logs and timber floated down through the slides, booms and river improvements on the Ottawa River and its tributaries, through which the said lumber, logs and timber now lying in and about the said. Nepean Mills and premises were floated down, amount to the sum of 4i - cents per saw log ; or, when reduced to hoard measure, the sum of 26 cents per 1000 feet. " 19. Shortly after the said insolvency the said collector of slide dues on behalf of the Crown demanded from the suppliants the sum of $2 per 1000 feet, board measure, for said slide and boom dues on all lumber, logs, and timber in, about, and around the mill premises aforesaid; and refused to allow the same, or any part thereof, to be moved unless this excessive charge was paid, and from time to time detained certain portions of the same, which the suppliants were desirous of moving and disposing of. "20. Under protest and by compulsion and to avoid the further stoppage of the said certain portions of lumber by the crown officers, the suppliants from time to time paid to the credit of the Receiver-General a sum of $6,054.69, being for slide and boom dues on said portions of said lumber at the excessive rate aforesaid of $2 per 1000 feet board measure. 21. Without any further warning, on or about the 12th day of July, A. l). 1878, the said collector of slide dues on behalf of the Crown seized the whole of the 1881 MER âwTs • n BANK of iiANADA v. THE QUEEN. st of " F te a l" c e ts f . t •
8 EXC[1EQUER COURT REPORTS. [VOL. 1. 1881 said lumber, logs, and timber in. and about the-said mill MERCHANTS and premises, and thenceforth took possession of and Piety% of detained and still keeps possession of and detains the CANADA V. same and every part thereof. TEE QUEEN. "22. The Crown has now under detention certain ste uP t ~ " " 1 'e r t i r " a ` . quantities of lumber, logs, and timber belonging to the suppliants," [shewn in detail in a schedule annexed to the petition] " and refuses to permit the suppliants to remove or dispose of the same or any part thereof. " 23. In order to avoid litigation and delay, on the 22nd August, A.h: 1878, the suppliants tendered to the said. Alexander J. Russell, the said collector of slide dues and the officer in charge of the Crown timber office, at the said City of Ottawa, for the use of the government of the Dominion of Canada for the use of Her Majesty, the sum of $1,500, being more than the proper dues which could have been demanded on the said lumber, logs and timber seized and detained as aforesaid, and demanded the release of, and the removal of, the embargo upon the said lumber, logs and timber seized and detained by the said collector on behalf of Her Majesty, but the said collector on behalf of Her Majesty, refused and neglected and still refuses and neglects to release or remove the embargo upon the said lumber, logs and timber or any part thereof, until payment . by the suppliants of the said sum of $8,533.01. "• 24. The suppliants submit that under the circumstances the Crown ought forthwith to release and remove the embargo upon the whole of the said lumber, logs, and timber now seized, detained and held possession of by the Crown as aforesaid. " 25. The suppliants submit that they ought to be repaid the sum of $5,267.59, being the amount overpaid by them on the said sum of $6,054.69 paid under protest and involuntarily as aforesaid.
VOL. 1.1 EXCHEQUER COURT REPORTS. o " 26. The suppliants understand that the Crown 1881 claims a general lien on the said lumber, logs, and tim- MERCHANTS ber seized and detained as aforesaid, for the whole of BANK or CANADA the said arrears of slide and boom dues and interest V. thereon alleged to be due to the Crown by the said THE QUEEN. insolvent at the time of his insolvency, but the f S ~ ttt a te c rn t e d n t suppliants submit that the Crown is not entitled under the said statutes, and under the said orders-in-council and regulations, so far as the said orders-in.council and regulations are intra vires of the powers conferred by the said statutes, to any lien or right of detention under the circumstances above set forth. " 27. The suppliants further submit that under the said statutes and the said orders-in-council and regu- lations, and the facts as above set forth, the Crown had no right to seize and take possession of the said lure • ber, logs, and timber in the manner afore described for •any slide or boom dues whatsoever. " 28. The suppliants further submit that if the Cro vmn had a lien or right of detention on the said lumber, logs and timber for any arrears of slide and boom dues, the amount tendered to the said collector was more than sufficient to satisfy the same ; and from thenceforth the said seizure, detention and possession thereof by the Crown was unlawful and inequitable. " The suppliants therefore pray : " (1) That Her Majesty should be advised that under the said statutes and under the . said orders-in-council and regulations, so far as they are authorized by the said statutes, the Crown is not entitled to a general lien on the said lumber, logs and timber at the said mill and premises aforesaid, the property of the suppliants and now in. possession of and detained by the Crown officers on behalf of the Crown as aforesaid, for the said arrears of slide and boom dues alleged to be due to the Crown from the said insolvent.
10 EXCHEQUER COURT REPORTS. [VOL. L 1881 " ( 2) That the Crown may be pleased to order the re- MERCHANTS lease and delivery up of the possession to the suppliants BANK OF CANADA of all the said lumber, logs and timber now detained. y. and held possession of-by the Crown as aforesaid. TIIE QUEEN. '. (3) That the Crown may be pleased to repay to the Stratement of IF ' aetw. suppliants the said sum of $5,26 7 .59 overpaid as aforesaid. " (4) That the Crown may be -pleased to grant the costs of this suit and such further and other relief in the premises as the circumstances of the case may require, and as to the Crown seemeth just and equitable. (5) The suppliants hereby offer to pay to the Crown the tolls or dues, if any, which Her Majesty's Court of Exchequer may determine are properly payable to the Crown by the suppliants under the circumstances." The Attorney-General for Canada, on behalf of Her Majesty, in his answer to the petition admitted the allegations contained in the 1st, 2nd, 3rd, 4th, 5th and 10th paragraphs thereof, but alleged, inter alia :— " 7. That upon the Ottawa River and its tributaries Her Majesty the-Queen for many years past has owned, as public works of the late Province of Canada and of the Dominion of Canada, certain slides, booms, and river improvements. " 8. That under the statutes in that behalf i he Gover-nor-in-Council was empowered by order-in-council to impose and authorize the collection of tolls and dues, upon the said public works, and for the due use and proper maintenance thereof, and to advance the public good, to enact from time to time such regulations as he might deem. necessary for the management, proper use, and protection of the said public works, and for the ascertaining and collection of the tolls, dues and revenues thereon, and by such orders and regulations to provide for the non-passing, or detention and seizure, at the risk of the owner, of any timber or goods on p
VOL. I. ] EXCHEQUER COURT REPORTS, 11 which tolls or dues might have accrued and not been. 1881 paid, or in respect of which any such orders and regu- MESx NTs lations might have been contravened or infringed, and le;;I: or Caxa nn for the sale thereof if such tolls or dues were not paid, y. and for the payment of such tolls or dues out of the THE QUEEN. . proceeds of such sale. sïRtCrilBnt of es. " 9. That under the said statutes all such dues and tolls are made payable in advance and before the right to the use of the public work in respect of which they are incurred accrues, if so demanded by the collector thereof. " 10. That before the time the timber and logs referred to in the said petition passed through the said slides, booms, and river improvements the Governor, under the authority of the said statutes, duly made, issued and published an order-in-council, which was in full force at the time the said timber and logs so passed through, and which among other things provided that no raft or parcel of timber should be permitted to enter any slide for the purpose of passing through without the owner or person in charge of such raft or parcel of timber first giving notice thereof to, and obtaining ' permission from, the superintendent, slide master, deputy slide master or other officer, as the case may be, duly appointed as aforesaid, under a penalty of not less than $4, and not more than $20, currency. " Also that the owner or person in charge of any raft &c , previous to entering any of the provincial cribs or slides, for the purpose of passing such raft &c., through the same, shall make a full and complete report of such raft, containing an account of the number of cribs and the description of timber composing the raft, &c., the name and designation of the owner or owners and of the supplier or furnisher thereof, together with marks and all other particulars relating thereto, under a penalty
12 EXCHEQUER COURT REPORTS. [VOL. I. 1881 of not less than $20, and not more than X200, for MERCHANTS refusing or neglecting to make such report. BANA CANAD o d f " Also that the owner or owners or person in charge v. of any raft, &c., shall before removing the same from THE QoEEx. any slide, boom or public work connected therewith, Statement or 76Ctp, subscribe and deliver to the said superintendent, &c., F an acknowledgment in duplicate certifying the number and description of cribs or of timber so passed, and shall pay the slide dues, or secure the same to the satisfaction of the collector of slide dues, under a penalty of not less than $20, and not more than $200, and shall further pay double the amount of dues which would otherwise be payable on any raft, &c., passing such slide without such acknowledgment. " Also that it shall be competent for the collector of slide dues, his deputy, &c., to enter upon, seize and detain at the risk, costs and charges of the owner or owners thereof, any raft, &c., which shall have been moved away from any of the provincial slides, booms or works, without the slide dues therefor, the amount awarded for damages or the fines and penalties, if any, being first paid or secured to his satisfaction. " Also that rafts, cribs and all descriptions of timber shall be held liable for the dues, damages, and penalties imposed under these regulations ; and the slide master or other duly appointed officer is authorized and required to seize and detain any such raft, crib, or parcel of timber until payment of such dues, damages, or penalties is made, or until the owner, or person in charge shall have given satisfactory security for the payment thereof. " 11. That owing to the great inconvenience and loss which the said James Skead would have suffered if a strict compliance with the provisions of the said order-in-council were enforced on behalf of Her Majesty, the said James Skead was permitted, in order
VOL. 1.] EXCHEQUER COURT REPORTS.. 13 to avoid such inconvenience and loss, to pass his tim- 1881 ber and logs through the said slides, &c., without first M ERCDANTs giving notice thereof to,and obtaining permission from, B ANK of C ANADA the proper person in that behalf, and without previously v. making a full and complete report thereof, with the TUE QUEEN. marks and other particulars, and without subscribing âtxte ane nt oY T~nct$. and delivering to the proper officer the required acknowledgment as above mentioned, and without paying the tolls and dues upon the said timber and logs, bit upon the understanding and agreement that the said timber and logs and lumber, and. other stuff, manufactured therefrom should be, and continue liable, for the payment of said dues and tolls, and to seizure and detention on behalf of Her Majesty until payment thereof. "12. That the timber and logs passed by the said James Skead through the said slides, &c., were so passed upon the understanding and agreement above mentioned, and the said timber and logs, and the lumber and other stuff manufactured therefrom were at all times liable to seizure and detention on behalf of Her Majesty until the dues and tolls due to Her Majesty were paid. " 13. That previous to the year 18/3, the said. James Skead paid. to Her Majesty the dues and tolls in respect of the timber and logs which he had so passed through, but in the year 1873 he made default in payment thereof, and requested Her Majesty, through Her servants, to give him time for the payment of the same, and not to seize and detain the said timber, &c. " 14. That Her Majesty, by Her servants, did refrain for a time from enforcing payment of said tolls and dues and from seizing and detaining the said timber, &c., upon the understanding and agreement that . her position with respect thereto, and her right to seize and
14 EXCHEQUER COURT REPORTS. [VOL. I. 1881 detain the same, should not be prejudiced, but no defi- MERCHANTS nite time for payment was specified. BANK C. " 15. That the said James Skead having continued v. to make default during the years 1873, 1874, 1875, 1876 THE iyQUEEN. and 1877 in payment of the said tolls and dues, or part o f F a ' c e ts n . s thereof, upon the understanding and agreement above mentioned, Her Majesty, by Her servants, called upon him for payment of the arrears, and would have seized and detained the timber, logs, lumber and other stuff, pursuant to Her powers in that behalf, but for the im-portunities of the said James Skead who represented his inability to pay the same at once in cash and requested further time for payment thereof, and upon the understanding and agreement that Her Majesty should have the right to seize and detain all the timber, logs and lumber and other stuff in and about the Nepean mills and premises in the petition referred to, as security for the payment of the said arrears of tolls and dues, Fter Majesty did refrain from enforcing immediate payment thereof, and inasmuch as the said James Skead desired to be allowed to ship the lumber and other stuff manufactured by him from the timber and logs which had passed through the said slides, booms and river improvements, he made to Her Majesty's Minister of Inland Revenue, the minister charged with the collection of the said tolls and dues, the following proposition : " O rTAwA, June 6th, 1877. " The Hon. R. LAFLAMME, &c., &c., &c., Ottawa. • " DEAR SIR,—I am indebted to your Department for slide dues, &c. I herewith propose to pay $2.00 per 1,000 feet B M. on all shipments made during the season. I have now on hand about eight million feet of lumber and as I propose manufacturing say from twelve to fourteen millions more this season, I expect
VOL. I.] EXCHEQUER COURT REPORTS. during the season to pay the whole amount of my in- 1881 debtedness to your Department, including the dues of 1876,—shipments will be made from present date say to the 10th of November, next. I trust this proposal will be found satisfactory and would feel obliged for THE QUEEN. an early reply . " Yours respectfully, " (Signed) JAMES SKEAD." " 10. Her Majesty was willing to refrain, and did refrain, from enforcing payment of the said tolls, &c., and from seizing and detaining the said timber, &c., so long as the said. $2 per 1,000 feet, board measure, were paid on all shipments made during the season as proposed by the said James Skead, but in so refraining it was understood and agreed that Her Majesty's right to enforce payment of the said arrears, and to seize and detain the said timber, logs, lumber and other stuff as security for payment thereof,should not be prejudiced or affected but should continue as before the said proposition was made." " 17. Pursuant to the arrangement referred to in the last preceding paragraph,the said James Skead,from time to time before the proceedings in insolvency were taken against him, paid to the proper officer of Her Majesty on that behalf the sum of two dollars per thousand feet, board measure, on the lumber shipped by him, and the said James Skead was not allowed by the officers of Her Majesty to remove any of the said lumber without first paying the said $2 per 1,000 feet, board measure, on the quantity which he desired to remove. " 18. Shortly before or abôut the time of the insolvency of the said James Skead, the suppliants claimed to have taken possession of the lumber, logs, and timber in and about the mills of the said James Skead and assumed the control and management of the same." 15 MERc ANTs , BA OP CA N A A A y. lS tatem t of F n a c c t t s o .
~>. 16 EXCHEQUER COURT REPORTS. [VOL. L 1881 " 19. That the suppliants when they so claimed to have • MERCHANTS taken possession of the said lumber, logs, and timber BANK or were well aware of the said proposal and arrangement CANADA y. • made, by the said James Skead to pay $2 per THE QvEFx. 1,000 feet, board measure, on all lumber shipped, and Statement of Facts. of the righ ts claimed by Her Majesty in respect of such lumber, logs and timber, and they acquiesced in and ratified said proposal and arrangement, and paid to Her Majesty's officers, in pursuance thereof, $2 per 1,000 feet, board measure, on many shipments of lumber made by them before making such shipments after having so assumed the control and management of the same. " 20. That Her Majesty was at all times willing to carry out the said proposal and arrangement and receive payment of the tolls and dues due in respect of the said lumber, &c., but the suppliants wrongfully, and without the knowledge or consent of Her Majesty's officers, removed a quantity of lumber, and shipped the same without paying the said sum of $2 per 1000 feet, board measure. " 21. That so soon as Her Majesty's officers became aware of such action on the part of the suppliants, they caused the said lumber, so wrongfully removed, to be seized and detained, and also caused all the lumber, &c., in and about the Nepean mills to be seized and held to answer for the said dues and tolls due with respect thereof; and there is now due and unpaid a large sum for such tolls and dues. " 22. After the execution of the alleged mortgages to the suppliants they allowed the said James Skead to continue in possession of the said lumber, &c., and to manufacture lumber from such logs,and sell and dispose of the same, and in all respects to deal therewith as his own property, and in making the said proposal and arrangement for the payment of the said $2 per 1000
VOL. I.] EXCIIEQÜER COURT REPORTS. 17 feet, board measure, as above mentioned, and in enter- 1881 ing into the various understandings, and agreements MERCEIANTs above mentioned with Her Majesty, or Her officers. BANK respecting the said tolls and dues and the rights of v. Her Majesty with respect to the said lumber, &c., the Tae QUEEN. said James Skead acted with the knowledge, approval or 1 u1t and authority of the suppliants, and the suppliants were and are bound by the acts of the said James Skead with respect thereto. " 23. That the amount paid by the suppliants with respect to said tolls and dues was not paid involuntarily or under protest, and that under any circumstances they are not entitled to repayment of the same," The suppliants joined issue upon the answer, except in so far as it admitted their petition, and alleged. in their reply :— " That up to and until the month of June, A.D. 1878, the suppliants had no notice or knowledge of the said alleged understandings and agreements in the said answer set forth. " That the payments of $2 per 1000 feet, board measure, made by the suppliants to Her Majesty's officers, as alleged in the 19th paragraph of the said answer, were made by inadvertence and in ignorance that the same were excessive or exorbitant charges, and in the belief that the same were the proper and usual tolls and charges ; and immediately your suppliants discovered that the said charge of $2 per 1000 feet, board measure, claimed by Her Majesty, was in excess of the usual tolls and charges, the suppliants protested against payment of the said charge, and never paid the said excessive charge afterwards except by compulsion and under protest to get possession of a portion of the said lumber, logs, and timber seized and detained by Her Majesty as aforesaid. The case was heard before Mr. Justice G-wynne. 2
18 EXCI[EQUER COURT REPORTS. [VOL. L 1$81 Bethune Q.C. and Gormully for suppliants ; MERCHANTS Lash Q.C. and Hogg for respondent. BANK OF CANADA Q v U EEN. G-WYNNE, J. now (September 14th, 1881,) delivered THE judgment. • Hemming for Judgment This is a proceeding by petition of right at the suit of the suppliants as mortgagees of certain logs and lumber mentioned in two indentures by way of chattel mortgage, dated respectively the 18th December, 1876, and the 11th May, 1877, made by the Honourable James Skead, since become insolvent, whose equity of redemption in the chattels so mortgaged has been released to the mortgagees under the provisions of the Insolvent Act then in force. The object of the petition is to recover possession of the logs and lumber which were seized by the Dominion Government ou the 12th July, 1878, upon a claim for slide and boom dues. The suppliants, by their petition, pray the release and delivery up to them of the logs and lumber so seized, and repayment of a sum of $5,267.59 which they allege had been paid by them, under duress, in excess of any claim, if any, that the Government had for such slide and boom dues ; and they offer to pay to the Dominion Government the tolls or dues, if any, which the Court may determine to be properly payable under the circumstances set up in the petition. The Honourable James McDonald, Her Majesty's At-torney-General for the Dominion of Canada, has filed his answer to this petition wherein he justifies the seizure of the logs and lumber for the purpose of obtaining payment of certain slide and boom dues alleged to have been due by Mr. Skead ; and he rests the right of the Dominion Government to seize them partly upon the statute in force relating to public works, and certain tolls established in pursuance thereof, and partly
VOL. I.] EXCHEQUER COURT REPORTS. 19 upon a special arrangement in that behalf made by 1881 Mr. Skead with the proper officer of the Government Mrs having control of the matter. BANK of CANADA The suppliants reply, joining issue upon this answer V. and further alleging that up to and until the month of TEE QUEEN. June, 1878, they had no knowledge of the agreement «easrns set forth in the answer as made with Mr. Skead, and 7advue "t' they further say that the payments of $2 per M. feet b. in. made by the suppliants to Her Majesty's officers, as alleged in the 19th paragraph of the said answer, were made by inadvertence and in ignorance that the same were excessive or exorbitant charges and in the belief that the same were proper and usual tolls and charges, and that immediately the suppliants discovered that the said chargé of $2 per thousand feet, board mea- sure, claimed by Her Majesty, was in excess of usual tolls and charges,they protested against payment of the said charge, and never paid the same afterwards, ex- cept by compulsion and under protest to get possession of a portion of the said lumber, logs, and timber seized and detained as aforesaid. In the 19th paragraph of the answer here referred to, the Attorney-General had averred that the suppliants, when they claimed to have taken possession of the said lumber, logs, and timber, were well aware of the said proposal and arrangement made by the said James Skead to pay $2 per 1,000 feet, board measure, on all lumber shipped, and of the rights claimed by Her Majesty in respect of such lumber, logs, and timber, and they acquiesced in and ratified said proposal and arrangement, and paid to Her Majesty's officers in pursuance thereof $2 per 1,000 feet, board measure, ou many shipments of lumber made by them before making such shipments,after having so assumed the control and management of the same. By the 7th section of the Petition of Right Act, of 2%
20 EXCHEQUER COURT REPORTS. [VOL. I. 1881 1876, it is enacted that the statement in defence may MERC HANTS raise, besides any legal or equitable defences in fact or BANK OF in law available under that act, "any legal or eguit- CANADA y. able defences which would have been available had THE QQEEN 'the proceeding been a suit or action in a competent 'X:" court between subject and subject." In addition, then, dnd _ g . n . i _ en . t t . o any defence which the Dominion Government, represented by theirAttorney-General, may have in virtue of the right to seize, asserted upon the authority of the statute law relied upon. and the regulations thereunder relating to slide dues, I must give them the same benefit of any defence set up by the Attorney-General as any private individual would be entitled to if the action were one of trespass de bonis asportatis against such individual at the suit of the present suppliants. I cannot, therefore, give any weight to an objection which was urged by the suppliants, viz.—that the Crown can acquire title only by record, and that, therefore, no claim on behalf of the Dominion Government can be asserted in virtue of the agreement relied upon in the answer of the Attorney-General as made with Mr. Skead in the ferms of his letter of the 6th June, 1877, therein pleaded. The Dominion Government must, under the provision of the act above quoted, be entitled to whatever benefit may accrue therefrom equally as any subject of the Crown if the proceeding were an action against such subject. The suppliants also raised an objection to the defence that any regulations which were made under c. 28 of the Consolidated Statues of Canada, fell through upon the repeal of that statute by 31 Vic., c. 12, and, there having been no new regulations made since the passing of 31 Vic., c. 12, that no tolls were at all levi-able for logs passing through the Government slides ; but the 71st section of that act provides that the enactments in the act, so far as they are the same in
VOL. L] EXCHEQUER COURT REPORTS. 21 effect as those superseded, namely, those in the 28th 1881 chapter of the Consolidated Statues, shall be. construed MERCK x rs as declaratory, and as having been in force from the e NADP time when the enactments of c. 28 became law. Now v. the provisions and enactments relating to tolls in 31 THE QUEEN, Vic., c. 12, are in substance and effect the same as the B B e en r s ons Jud .ent. provisions in c. 28 of the Consolidated Statutes, under which the regulations relating to timber passing through the slides were made, and therefore, under the provisions of sec. } 71 above quoted, we must read these sections as having been in force since the passing of the 28th chapter of the Consolidated Statutes, and, therefore, the regulations made under that statute are in. effect regulations to be construed as made under 31 Vic,, c. 12. There is, therefore, nothing in this objection. The suppliants further object that, by the regulations referred to, the charge for all timber passing through the slides is to be levied per the crib, and that saw logs do not come down in cribs, and that, therefore, there is no toll chargeable in respect of saw logs. The answer given to this objection, if there be anything in. it, I think sufficient, namely, that the suppliants cannot be heard to make it in view of the allegations contained in the 6th and 18th paragraphs of their petition, by the former of which they aver that Under the Consolidated Statutes of Canada, c. 28, and the Act passed by the Parliament of Canada, in the 31st year of Her Majesty's reign, c. 12, and under certain orders-in-council and regulations passed in pursuance of, and under the authority of, the said statutes, the Crown was and is entitled to exact payment of certain tolls or dues (generally known as "slide and boom dues") from the owners of all timber and logs ,passing through the said slides, booms, and rives improvements, and to demand payment of the same in advance under the said statutes ; and by paragraph 18 they aver that The proper slide and boom dues on lumber, logs, and timber floated down through the slides, booms, and river improvements on the Ottawa, and its tributaries, through which the logs and tim-
22 EXCHEQUER COURT REPORTS. [VOL. I. 1881 ber now lying in and about the said Nepean mills and premises MERCHANTS were floated down, amount to the sum of 4 cents per saw log, or BANK of when reduced to board measure to the sum of 26 cents per 1,000 CANADA feet. THE QUEEN. All these preliminary objections being removed and Reasons disposed of, the case must be determined upon the for Jnd cent. merits, and with that view I propose to consider it 1 st, as if Mr. Skead still owned the logs and lumber in question unaffected by any mortgage thereon, and that the question arose between the Dominion Government and him ; and 2ndly, as one between the Government and the suppliants claiming as mortgagees under the provisions of the mortgages which have been pleaded and produced. By the regulations made in 1865, under the provisions of c. 28 of the Consolidated Statutes of Canada, to secure the due payment of slide dues and for the protection of the provincial slides, it was among other things, provided, in short substance, that— Sec. 2. Persons in charge of timber shall give notice to the superintendent, slide-master or deputy slide-master and obtain permission from him to pass through any slide, under a penalty stated. Sec. 3. That all rafts or parcels of timber shall be reported before entering the provincial slides. Sec. 4. That the owners or persons in charge shall not allow any description of timber to accumulate at the head of any slide, but shall immediately pass the same through the slide. Sec. O. That the owner or person in charge before removing any parcel of timber from any slide, boom, or other work connected therewith shall subscribe and deliver to the said superintendent, slide-master, &c., &c., an acknowledgment in duplicate of the timber and description of the timber so passed, and shall pay the slide dues and secure the same to the satisfaction of the collector of such dues under a penalty. Sec. 9. That it shall be competent for the collector of slide dues or any person duly authorized by him to detain, at the risk and cost of the owner, any parcel of timber which shall be moved from any slide without the slide dues being first paid or secured to his satisfaction.
VOL. I.] EXCIIEQUER COURT REPORTS. 23 Sec. 10. That rafts, cribs and all descriptions of timber shall be 1881 held liable for the dues, etc., etc., imposed under the regulations, MERCHANTS and the slide-master or other duly appointed officer is author- BANK of ized and required to seize and detain any such raft, crib, or parcel CANADA of timber, until payment of such dues, etc., etc., is made, or until TEE QUEEN. the owner or person in charge shall have given satisfactory security for the payment thereof within thirty days after the same shall Re Mono for have been declared to have been incurred, or shall have- been Judgment. demanded—and in default of such payment being made within the said term of thirty days, then thee said slide master, etc., may proceed to sell by public auction any such raft, crib, or parcel of timber ; but at least two weeks notice of the day of the intended sale by auction shall, in the meantime, have been given and inserted in one or more of the public newspapers published at the nearest place from the said works, and a copy of such notice shall also have been placarded during the same time (two weeks before the intended sale), in a public and conspicuous place, at or near the said works where the raft, crib, or timber is lying. At the time of the making of these regulations there were, as appears by the evidence, only a few slides and these at•Ottawa. Afterwards a number of slides were constructed higher up the river Ottawa and its tributaries, several being on the Madawaska, down which river all the logs in question came ; some of the slides being located. 200 miles up that river in places where there are no inhabitants or slide-masters. Since those slides have been constructed, from the fact of some of them being in such remote places, and also because logs belonging to different owners and being destined for different points, came down loose, by night as well as by day, carried by the current of- the river without any person in charge, it became practically impossible to apply the regulations to the collection of slide dues, &c., on logs coming down the Madawaska ; acting as a juror, T find this as a fact from the evidence. I, in like manner find as a fact, that in consequence of this impossibility, and in the interest of the log owners, and for the purpose of enabling them beneficially to conduct their
24 EXCHEQUER COURT REPORTS. [VOL. 1. 1881 business, an arrangement was come to between the MERCHANT S department of the Government having supervision of LANK of CANADA the matter and the persons getting out logs, whereby U. it was arranged that the owners should, at the end of THE QUEEN• the season upon the arrival of their logs at their Ii eoaz o ns for respective mills, make a return to the Government Judgment. officials of all logs so come down, which return was checked by returns previously received by the Government, through their wood-rangers, of all logs cut in the woods by each log owner ; and, upon the quantity being thus determined in the case of each log owner, the slide dues were agreed to be paid by the log owners, such dues being estimated at 43 cents per log. For the benefit of the log or mill owners, also, arrangements were from time to time made between such log owners and the Government officials, whereby time for payment of such dues was extended upon the mill owners satisfying the Government officials that they had logs and sawed stuff at their mills out of which the Government could, at any time, by sale thereof, realize the dues if the mill owners should not keep the terms agreed upon by them as to the mode and time of payment, upon the time for payment being extended to them. I find this to have been the constant practice of the department of the Government having charge -of the matter at the time when Mr. Skead first became a mill owner, and owner of logs coming down the Madawaska, and thence continually until the present time. I find also, as a fact, that from Mr. Skead first becoming the owner of' logs coming down the Madawaska until the month of June, 1877, he settled with the Government for his slide dues only under the above arrangement, and that from 1873 until June, 1877, he became largely in arrears for slide dues, the time for payment of which was repeatedly, from time to time at his request, ex-
VOL. I.] EXCI-IEQUER COURT REPORTS. 25 tended under and subject to the terms of the above 1881 arrangement, which, in fact, had become the constant MEx g „TS and invariable practice of the Government, established BANK CAN A V Aof in the interest of and for the benefit of all mill owners. I 73. HE find,xnoreover, as a fact that on the 6th June,18 l,the said. QuEEN. Mr. Skead being largely in arrears to the Government I`"for"" JU4l .,.,"r' for slide dues upon logs of his floating down the Mada- waska to his mills, called the Nepean Mills, addressed a letter to the Minister of the Dominion Government having charge of the matter in the words following :— OTTAWA, June 6th, 1877. The Honorable R. LAFLAMME, &C., &C., Ottawa. DEAR Srn,—I ani indebted to your Department for slides dues, etc. I herewith propose to pay $2 per 1,000 feet b. in., on all shipments made during the season. I have now on hand about eight million feet of lumber and as I purpose manufacturing, say, from twelve to fourteen million more this season, I expect during the season to pay the whole amount of my indebtedness to your Department, including the due's of 1876, shipments will be made from the present date, say to the 10th of November next. I trust this proposal will be found satisfactory, and would feel obliged for an early reply. Yours respectfully, (Sgd.) JAS. SKEAD. And I further find that as a fact on the same 6th day of June the said Mr. Skead addressed a letter to Mr. A J. Russell, the officer who, as Crown Timber Agent, had immediate control of the matter under the Minister to whom the above letter was addressed, which letter to Mr. Russell is as follows :— OTTAWA, June 6, 1877. A. J. RUSSELL, Esq., Crown Timber Oilico, Ottawa. DEAR Sin,—I have made a proposal to the Minister of Inland Revenue to pay upon all shipments of lumber from my yard, during the season, $2 per M. b. in., with a view to liquidating my indebtedness. I have about eight (8) million feet of old lumber now on hand and am now cutting from (12) to (14) twelve to fourteen million feet. I enclose you a check for $216, being $2 per M. b. in. on a barge load
26 EXCIIEQUER COURT REPORTS. [VOL. I. 1881 which left yesterday containing 108,000 feet, odd. The barge "C. S. Morse," Capt. S. M. Hoadley. I will feel obliged if you will send me MERCHANTS 8, K o f a permit for same, or telegraph the canal authorities to pass the vessel. CANADA Yours very truly, v. THE QUEEN. JAMES SKEAD. Reasons At the same time Mr. Russell, at Mr. Skead's request, awag r a " n r went with him to his mills for thepurpo se of satisf f y y -- ing the former that the statement made by the latter as to the stuff he had at his mills was correct, and that it afforded abundant security to the Government for payment of the arrears in the manner proposed. Upon a thorough inspection by Mr. Russell, with this end in view, of the stuff at Mr. Skead's mills, the former (to whom the letter of the latter to Mr. Laflamme, of the 6th June, was referred for a report) reported recommending the proposition of Mr. Skead to be acceded to, which was accordingly done, and the acceptance of it was communicated to Mr. Russell, for his guidance, by a letter of the 5th July, as follows : INLAND REVENUE DEPARTMENT, OTTAWA, July 5, 1877. SIR,—Adverting to reference No. 21159, being the proposition of Mr. Skead as to the payment of arrears of slide dues, and to your report thereon, I have to inform you that :-1. The Minister consents that if Mr. Skead makes regular payment of two dollars ($2) per thousand feet on all lumber shipped by him, your recommendation may be carried out. 2. If it shall appear that payments so made are likely to be sufficient to extinguish Mr. Skead's liabilities within a reasonable time, no further immediate action will be taken for the recovery of such dues. I have the honor to be, sir, Your obedient servant, A. BRUNEL, Commissioner. A. J. RUSSELL, Esq., Crown Timber Agent, Ottawa. And I find that the arrangement thus made with Mr. Skead continued to be acted upon by him, he paying $2 per M. b. in. on each shipment as agreed upon, until the month of July, 1878, when sawn lumber was
VOL. I.] EXCHEQUER COURT REPORTS. 27 shipped by railway to Brockville without payment of 1881 the stipulated $2 per M., and without the knowledge MEacH ANTS or permission of the department, and I find that BANE of CANADA although nothing was expressly said as to the rights V. of the Government to realize out of the stuff at Mr. THE QUEEN. Skead's mills, in case he should violate the agreement ror nM so entered into with him J`tdginent. by shipping lumber without payment of the $2, and without the knowledge and permission of the Department, yet, from the rules and practice in the Crown Timber Agent's Office, with which Mr. Skead was thoroughly conversant, and to conform with which the agreement was intended, it 'was the intention of Mr. Skead in making the above arrange- ment not only that the Government should secure themselves by refusing permits for vessels to pass through the canals until the stipulated rate of $2 per 1,000 feet on each shipment by water should be made, but also, by seizing and selling the stuff at the mills, to realize the arrears in case lumber should be removed by land,in prejudice of the agreement,without payment of the stipulated rate, and without the knowledge and permission of the department; and this I find to have been in substance and effect the purport and intent of the agreement made by Mr. Skead with the Govern- ment, upon the basis of the former's letter of the 6th June, 1877. I couic, therefore, to the conclusion that if Mr. Skead were the suppliant, asserting a claim against the Gov- ernment based upon a seizure of the lumber, made for the purpose of realizing thereout the arrears of slide dues, he would, under the circumstances above detailed, be entitled to no relief unless, nor until, he should pay the arrears. To such a claim the defence that what was done was done by the leave and license of Mr. Skead, and in pursuance of an agreement to that effect made by him, would have been sufficient.
28 EXCHEQUER COURT REPORTS. [VOL. T. 1881 Between subject and subject placed in the like posi- MERCHANTS tïon, such a defence would be abundantly good ; and, BANK OF CANADA therefore, under the terms of the Petition of Right Act, y. it would be equally good if set up by the Crown as a TEE QoEEN. defence to the claim of a subject ; and that it should be Rraeons so f'or is consistent with reason and justice. The extent Judgment. to which the courts go in modern times, wholly independently of the above provisions of the statute, to enforce, both in favor of and against the Crown, oral contracts made between individuals and officers of the Government as representing the Crown,may he seen by reference to the Attorney-General v. Contais (1). There, letters patent of certain land granted by the Crown were set aside at the instance of the Attorney-General upon the ground that they were issued improvidently, but the learned Chancellor of Ontario, giving judgment, expresses his opinion to be that relief could, under the circumstances, be properly afforded in equity upon the same ground as relief could be afforded between subject and subject, namely, that the applicant for the patent obtained it upon the faith of its being left open to the grantor of the patent to grant a license to cut timber, and that being so it was a fraud on his part to do anything in contravention of that In faith of which he obtained it. The case was, that while a lot of Crown land was subject to a timber license terminating upon the 30th day of April then next, the lot was sold to a purchaser, and the commissioner endorsed upon the letters patent a memorandum to the effect that if the license should be renewed for one year from its expiration on the 30th April then next, the letters patent should be subject to such renewal although the statute authorizing the issue of licenses to cut timber did not authorize any license to be issued affecting lands after they should be granted by the Crown ; but (1.) 25 Grant 346.
VOL. I.] EXCHEQUER COURT REPORTS. 29 whether or not in such a case the relief under the 1881 ordinary principles of the doctrine of equity, as MEn x tiTs suggested by the learned Chancellor, could have been BANKD F granted in the above case, there can be no doubt that, V. in view of the provision above quoted from the Petit on THE QUEEN. i of Right Act, whatever could be relied upon as a Reee. Judgment. defence to au action in a similar case between subject and subject, may with equal effect be relied upon by the Government to the suit of a suppliant by a Petition of Right. I may, however, here say that from Mr. Skead's evidence, it is quite apparent that no such claim as is here made would ever have been asserted by him, for the reason that in his opinion it would not have been fair or honorable in him to make such a claim in view of the fact that the time and mode of payment arranged by him with the Government, was altogether in the interest of, and for the benefit of the business he was carrying on. Indeed the Department of Public Works would become an intolerable nuisance if it should be so administered that no relaxation of the strict regula- tions of the department should be permitted at the instance and in the interest of the commercial com- munity having dealings with it, unless at the peril of the sacrifice of the rights and interests of the public whose agent only the department is. I come therefore, secondly, to the consideration of the case as one between the suppliants, claiming as they do through Mr. Skead, of the one part, and the Government, of the other. The suppliants insist that as the agreement of June, 1877, was entered into by Mr. Skead after the execution of the indentures under which they claim, they cannot be affected by that agree- ment hôwever much Mr. Skead personally might have been if the indentures had not been executed, and they contend that under the statute affecting public works, •
30 EXCHEQUER COURT REPORTS. [VOL. I. 1881 and independently of the above agreement, the logs MERCHANTS having passed the slides, the Government has lost all BANK OF claim upon the logs or their produce for the recovery CANADA V. of the dues, and that the claim of the Government was THE QUEEN. one only in the nature of an action for debt against Re f a o s ro ns Mr. Skead personally. Jnanent' By indenture, bearing date the 18th December, 1876, Mr. Skead granted, bargained, sold and assigned to the suppliants, their successors and assigns, all the lumber and logs situate at his mills and booms in the indenture particularly described, situate on the Ottawa River, in the Township of Nepean, to have and to hold the same to the only proper use and behoof of the suppliants, their successors and assigns forever ; with covenant of warranty, subject to a proviso that if he, his executors or administrators, should pay to the suppliants the amount of certain promissory notes in the indenture mentioned, to the amount of $136,560, and all renewals thereof with interest not extending beyond the 15th December, 1877, then the said indenture should be void ; and Mr. Skead thereby covenanted that if default should be made in payment of any of the said promissory notes, or of any renewals thereof, or in case he should attempt to sell or dispose of, or in any way part with the possession of the said goods, chattels and property, or any part thereof, otherwise than in the usual course of business, or to remove any part thereof out of the County of Carleton, without the consent of the suppliants, their successors, or assigns to such removal, it should be lawful for the suppliants either to sell the said goods, chattels and property, or at their option, that they should peaceably and quietly have, hold, possess and enjoy the said goods, chattels and property without the let, molestation, eviction, hindrance or interruption of Mr. Skead, his executors, administrators or assigns. This indenture contained
VOL. I.] EXCHEQUER COURT REPORTS. 31 no redemise clause or proviso, that until default the 1881 grantor should continue in possession of the goods and MES CHANTS chattels so granted, bargained and sold, or of any part BAiv nvn thereof.' y. Now, upon the authority of McAulay v. Allen (1), the THE QUEEN' suppliants by this indenture, by reason of there being iter ". no re-demise clause or proviso as to grantor retaining judgment V possession until default inserted in it, became entitled both to the property and possession of the property granted, bargained and sold by the indenture, and being so entitled might, if they had pleased, at any time have exercised their right to sell therein contained without subjecting themselves to • any action, suit, claim or demand by the grantor—and that without waiting for the maturity of the notes. Whether that decision be right or wrong, that is to say, whethe .r a right in a s grantor to retain possession until default • may or may not arise by implication from the terms of an indenture, without what is called the redemise clause or proviso for retaining possession until default being inserted therein, sitting in this court, not as a Court of Appeal, but in. an Ontariô case to administer the law of Ontario, I am bound by that case, which has since been confirmed and followed in Samuel y. Coulter (2). Moreover, assuming even that a Court of Appeal should, if the point came before it, hold, that. such a right to retain possession might arisé by implication from the terms of an indenture, although there should be no such re-demise clause inserted in it, I should be of opinion that this case should be governed by the decision in McAulay v. Allen for two reasons : 1st, because the proper inference to be drawn from the fact of the re-demise clause being admitted is, I think, that the parties entered into the arrangement, for carrying out which the indenture was executed, in . (1) 20 U. C. C. 1'.417. (2) 28 U.C.C.P. 240.
32 EXCHEQUER COURT REPORTS. [VOL. I. 1881 view of the decision in McAulay y. Allen, and in con-MERCHANTS templation of the rights of the grantees being as is there-BANK OF • CANADA in laid down ; and 2dly, because I find, as a matter of v. fact, that by a collateral arrangement made at the same THE QUEEN. time as the indenture was executed, it was agreed that itefor s sales of lumber should be made only by Mr. Skead judgment. upon the condition that the proceeds of all sales should be paid to the suppliants, who were to supply the cash necessary to enable him to carry on the business, and who were to have control of the sales. Upon these terms the business was conducted, so that the proper inference. to be • drawn from the fact of the re-demise clause being omitted is, in my opinion, that the intention of the parties to the indenture was that the suppliants were to have such absolute control of the property granted, bargained and sold to them by the indenture as would enable them to sell the property themselves, using Mr. Skead as their agent for that pur- • pose, and irrespective of all default as to the payment of the promissory notes. f am confirmed in this opinion by the terms of the indenture of the 11th May, 1877, in which the terms of the arrangement are set out at large. By this indenture, after reciting that Mr. Skead was then indebted to the sûppliants in the sum of $334,147.66, for $136,560, part of which, they held the property conveyed by the indenture of the 18th December, 1876, and other property conveyed by other indentures, he granted, bargained and sold to the suppliants 60,000 saw logs then in the woods, not yet brought down to Ottawa, to have and to hold the same to the suppliants, their successors and assigns, to and for their own use for ever, subject to a proviso that if Mr. Skead, his executors or administrators, should pay certain promissory notes mentioned in a schedule annexed to and made part of the indenture, representing the whole of the
VOL. I.] EXCHEQUER COURT REPORTS. 33 said debt of $334,147.66, and including the notes 1881 secured by the indenture of the 18th December, 1876, MERCHANTS or renew the said notes, the whole, however, to be BANK of CANADA paid and satisfied before the 20th day of December v. then next, and also should (in the event of the sup- THE QUEEN. pliants having to pay or advance any money to get the 'err" said logs down the streams to the mills to be manufac- .re.'".". tured, or for the purpose of causing the same to be manufactured for market in order to their realizing their claims,) repay -the same, and all moneys the suppliants might be obliged to pay to get the said timber to inarket, in order to realize their money or part thereof thereout, together with interest, and if he, Mr. Skead, should observe, perform and keep all the covenants upon his part therein contained, then the said indenture should be void ; and the said. Mr. Skead thereby warranted the said goods and chattels to the said suppliants, their successors and assigns. This indenture contained no re-demise clause or proviso that the grantor should retain possession of the said goods and chattels until default, but in lieu thereof it was provided, and Mr. Skead thereby covenanted, that he should and would, with all reasonable despatch, that season, if possible, drive or cause to be driven the said saw logs to his mills aforesaid, and then would, with like despatch, manufacture the same into lumber of such description as should be approved by the suppliants through their manager at Ottawa, and that he would, in like manner, with all reasonable despatch, drive and get to market all the square timber covered by that indenture ; that all sales of the sawn -lumber made on time should be subject to the approval of the suppliants, which approval should be first had through the suppliants' manager for the time being at Ottawa, and no sale on time should be made without such approval ; that if the lumber should be shipped to 3
34 EXCHEQUER COURT REPORTS. [VOL. I. 1881 any consignee or consignees for sale, the suppliants MER H Nrs should first approve of such consignees and no lumber BANK CANAD o A r should be shipped without such approval ; that when y. lumber should be sold otherwise than for cash in the THEQIIEEN. mill yard, all bills, notes, and bills of lading taken Re r ". therefor, should be handed over to the suppliants at Judgment. once, and should be applied as follows : the proceeds of all cash sales should be . handed over to the suppliants, and with all other the proceeds of said lumber should he applied first to pay off and discharge all sums of money which the suppliants might have paid out, or have advanced, to secure the getting of said logs to the mills and their conversion into lumber, and getting the same to market and the like, and all interest and charges in respect thereof, and that the balance should be applied in reduction of the said debt due to the suppliants. That the said Mr. Skead in all respects in getting the saw logs to his mills,. and in the manufacturing of said stuff, should in all things carry on the work in a proper and efficient manner to the satisfaction of the suppliants, and as they might require in order to the efficient and rapid realization of the said debt and to the greatest advantage. Now upon the authority of ihlcAulay v. Allen (1), and of Samuel y . Coulter (2), the suppliants were by this instrument possessed of the right of property and of the right of possession in all the chattel property at Mr. Skead's mills, and of the logs in the weods cut in the winter of 1876-77 not yet come down. There being no proviso that until default Mr. Skead should remain in possession of the property, he could not have maintained any action against the suppliants if they had taken possession of what sawn lumber then remained at the mills and had sold it, or if they had sold the logs not yet come down as logs before being manuilic- (1) 20 U. C. C. P. 417. (2) 28 U. C. C. P.240.
VOL. I.] EXCHEQUER COURT REPORTS. 35 tured into lumber, if it had not been for the special 1881 provision in the indenture qualifying that right. I AirRC ANTS must then read the provision in that behalf in the in- Cnxene denture as inserted designedly to supply the place of the y. omitted proviso, and to control the manner in which THE QUEEN the business should be carried on at Mr. Skead's mills Biz-so as to enable the suppliants in the most efficient Jud ~emt. manner, and in the mode most satisfactory to themselves, to realize the payment of their debt. The substance and effect of the indenture, therefore, and the intent of the parties to it, was that the suppliants, being possessed of the right of property and of possession in the goods in question, should prepare the lumber for market and make all sales and ship the lumber, so being their property, through the intervention of Mr. Skead as their agent for that purpose. Mr. Skead was to cause the logs not yet brought down to be brought down to his mills, doing whatever might be necessary for that purpose, and was to manufacture them only into such description of lumber as the suppliants might require. So likewise no sales on time were to be made by him, nor was any lumber to be shipped or consigned to any person without the consent and approval of the suppliants for that purpose first obtained. No sales for cash were to be made by him except upon condition that the moneys arising from such sales should be forthwith handed over to the suppliants ; and in like manner it was provided that all bills and notes received by Mr. Skead in payment of lumber sold on time should be delivered to the suppliants, such moneys to be applied 1st, in discharge of all moneys to be advanced by the suppliants in payment of the expenses attending the getting down the logs not yet brought down and attending the manufacturing the same into lumber, the getting the lumber to market, and all interest and all charges in respect thereof; and 2ndly, in 3
36 EXCHEQUER COURT REPORTS. [VOL. I. 1881 reduction of the suppliants' debt. A 11 the work, in fact, NERC ANTswas to be done with the property, which was the sup-CA AD F pliants', through Mr. Skead's intervention, to the satis- y. faction of the suppliants and as they might direct and THE QUEEN. require; he receiving whatever moneys should come to R""" r ~" s his hands as the proceeds of the sale of such pro- Judgment. perty solely to the suppliants' use, and they supplyin g g all the funds necessary to carry on the business, adding the amount to their claim against Mr. Skead. Here then we find all those particulars provided for, the absence of which was relied upon in Molliwo, March 4- Co. v. The Court of Wards (1) as establishing the non-existence of the relations of principal and agent in that case. The property is conveyed to the suppliants who expressly reserve to themselves the right to dictate into what description of lumber the logs shall be manufactured, with whom alone contracts for the sale of the lumber may be entered into, to whom upon sales it shall be consigned. All this is provided for being done through the intervention of Mr. Skead, but for their sole benefit They assume to deal with the property as their own, in fact as it was in law by the terms of the indenture, but so to deal with it as is provided specially in the indenture, through the intervention of Mr. Skead, who covenants to act only under the direction of, and to the satisfaction of; the suppliants. There can be no doubt, it appears to me, that the effect and the intent of the agreement contained in this indenture was to make the suppliants principals and Mr. Skead their agent in carrying on the business, in which he had theretofore been engaged, in future for the benefit of the suppliants and with their property, until it should be sold or they should be paid their debt. It was while conducting the business under the (1.) L. R., 4. P.C., p. 419.
VOL. I.] « EXCHEQUER COURT REPORTS. 37 terms of this indenture, that Mr. Skead made the agree- 1881 ment involved in his letter of the 6th of June and the MERCHANTS acceptance thereof of the 5th July, 1877. It will be . BA CA r N g A D o A f observed that as to the 60,000 logs cut in 1876-7, it was y. plainly the interest of the suppliants that those logs THE QUEEN. should be brought down to the mill to be manufac- Bl r"g tured into lumber for the suppliants' benefit. From Judgment: the terms of the agreement it is apparent that it was contemplated that the suppliants should advance whatever sum might be necessary to secure their being brought down. The suppliants also were aware at the time that this indenture of May, 1877, was being prepared, and when it was executed, that Mr. Skead was in arrears to the Government for slide and boom dues accrued due in previous years' upon logs brought down and already manufactured into lumber. Mr. Skead's only doubt is whether they were not aware of this at the time of the execution of the indenture of December, 1876; but it is quite certain that they were aware of it in May, 1877, and that is sufficient for my present pur- pose, for, between December and May; there does not appear to have been anything done with the property mentioned in the indenture of December. The logs mentioned in that indenture still remained as logs, and the sawn lumber still remained at the mill, in May, 1877, when the indenture of the 11th May was executed, and that inden- ture was executed not merely to give to the bank security upon the 60,000 logs cut in the winter of 1876-77, but to make arrangements for the sale of all the sawn lumber then at the mill, and for the man- ufacture into lumber of all logs covered by the inden- ture of December, 1876, as well as by that of May, 1877. Mr. Skead says that Mr. Hague, the general manager of the bank, when one of those indentures was being prepared, asked him " if any person had any lien upon
38 EXCHEQUER COURT REPORTS. [VOL. I. 1881 this lumber ? " Whereupon Mr. Skead asked in reply MERCHANTS whether he meant the sawn lumber or the logs ? BAND OF Mr. Hague answered " both." To which Mr. Skead CANADA V. replied that ",there was none but the Government lien THE QUEEN. for slidage and booinage." Re adds also- that on one Kw" or two occasions the bank had statements made out a"d"p"`' from his books by his book-keeper, who is now dead, and that his books would have shown the amounts of the arrears ; and, finally, he says he has every reason to believe that the suppliants must have known the terms of the agreement because he was giving cheques on the bank for the amounts from time to time payable under the agreement. Mr. Hague not having been called to disprove his having had the knowledge thus imputed to the bank through him, I must find as a fact that undoubtedly at the time of the execution of the indenture of May, 1877, if not at the time of the execution of that of December, 1876, the bank had knowledge that Mr. Skead was in arrears to the Government for slide and boom dues on logs previously brought down to the mills and then already manufactured into lumber. It would not, perhaps, be too much to infer that as business men they had taken the means which were in their power to inform themselves of the amount of those arrears, which they could have done by applying to Mr. Skead's book-keeper, to whom as appears they did apply upon some occasions for some purposes. Mr. Skead himself appears to have had no means whatever to pay those arrears, all his means being, as he says, in the business in which the bank had become interested in the manner provided by the indenture of May, 1877. Now the suppliants being interested in having the logs cut in 1876-7 brought down to the mill and manufactured into lumber, and Mr. Skead being bound by the in
VOL. I.] EXCHEQUER COURT REPORTS. 39 denture of May, 1817, to take such measures as should 1881 most effectually secure the logs being brought down MEa s Ts and manufactured into lumber such as the suppliants BANK OF CANADA should require, and having in fact covenanted with v. the suppliants to carry on the business for their bene- QUEEN. TRE fit under the terms of that indenture, he may, for the 'err' purpose of making arrangements with the Government Jud g un e n t , which should secure the safe conduct of the logs to the mill without any interference upon the part of the Government, and for the purpose of providing for pay- ment Of the arrears of slide and boom dues, fairly, I think, be held to have been invested by the suppliants with sufficient authority to make such an arrangement with the Government as to him would seem reasonable and proper, and as he should make if still carrying on the business wholly and solely for his own benefit ; and that, therefore, he had sufficient authority to bind them by the terms of the letter of June, 1817, which, under all the circumstances, must, I think, be admitted to have been reasonable and proper, and, indeed, in the interests of the suppliants ; for I conclude from Mr. Skead's declared inability to pay the amount due to the Government, that if the Government had refused to comply with Mr. Skead's proposal, and had in any way proceeded to enforce their claim (whatever may have been their legal right) in that case, Mr. Skead's insolvency, which subsequently took place, would inevitably have been precipitated at a time when it would have been prejudicial to the sup- pliants' interest, unless they had come forward to pay the amount. But whether it may, or may not, be a fair con- clusion to draw that Mr. Skead was invested by the suppliants with sufficient authority, as their agent, to enter into the agreement made by him with the Government, it is not necessary to decide. It is not
40 EXCCIEQUER COURT REPORTS. [VOL. I. 1881 necessary to rest the case upon his having had such MExc 'NTsprevious authority, for I am unable to arrive at any BAN of CA NA D other conclusion from the evidence than that as a mat- v. ter of fact the suppliants adopted, ratified and confirmed THE Q17EEN• that agreement by acting under it, and advancing Rea ro ~ r o ne moneys to pay the Government in accordance with its sn''.nPnr. terms, after they must be held to have had full knowledge of the nature, purport, tenor and effect of it. I have already drawn attention to the fact (which acting as a juror, I find to be established by Mr. Skead's evidence, which is not contradicted) that at the time of the execution of the indenture of May, 1877, the bank who are the suppliants, had notice that Mr. Skead was . in arrears to the Government for slide dues upon logs then already received by him. Mr. Ritchie, who gave his evidence in that cautious manner which would naturally be expected from a truthful and conscientious witness, when interrogated as to the details of conversations after the lapse of some years, has, by his evidence, strongly impressed my mind with the conviction, and I therefore find it to be a fact, that upon some occasions in the summer of 1877, when presenting to the bank a cheque or cheques of Mr. Skead for slide dues calculated upon the basis of the letter of June, 1877, he gave to Mr. Kirby, the agent of the suppliants at Ottawa, and who, by the indenture of May, 1877, had control of Mr. . Skead's business, the information that the cheque or cheques so presented was or were for arrears of slide dues at the rate of $2 per 1,000 feet, and that the Government was exacting and receiving at that rate from all parties in arrears for slide dues, of whom Mr. Skead was one. Further, that upon an occasion in the year 1877, or in the beginning of 1878, of Mr. Kirby making enquiries at the office of the Minister of Inland Revenue in relation to these slide dues, the witness exhib-
VOL. I.] EXCHEQUER COURT REPORTS. 41 ited to him Mr. Skead's account with the Government 1881 for slide dues, showing him to be in arrears, and that MEtt  rrTs witness then gave Mr. Kirby a pencil memorandum of- CA n na that account as appearing in the ledger shown to him, v. THE QUEEN. which Mr. Kirby took away with him. Indeed Mr. Kirby's own evidence is, to my mind, quite conclusive, Herr- wholly irrespective of Mr. Ritchie's evidence, to affect Tuts- e"t" the suppliants with knowledge of the contents of the agreement resulting upon the letter of the 6th June, 1877, before they made any of the payments made by them for slide dues in the year 1878. Mr. Kirby, who was the suppliants' manager at Ot- tawa, from some time in 1870 unto some time in 1878, says : The usual intimacy between a banker and his customer existed between Mr. Skead and myself, as manager of the suppliants. I did not know the amount of arrears of dues owing by Mr. Skead to the Government at the date of the chattel mortgage. I was very much in ignorance of the indebtedness of Mr: Skead to the Dominion Government for slide dues. Mr. Skead never told me the amount he was in arrears. He only told me of being in arrears for dues when he wanted me on behalf of the suppliants to make payment of such arrears. From the date of the chattel mortgage of the 11th May, 1877, if any payments were made by Mr. Skead on account of slide dues, they must have been paid by Mr. Skead's cheques. • Then speaking of the agreement or proposal contained in the letter of June 6th, 1877, he says : I believe I first became aware of this proposal or arrangement in the close of the year 1877 or in the beginning of the year 1878. The way I became aware of this proposal' or arrangement having been made was by finding it recorded in the books of the Crown Timber Office at Ottawa, when searching there in reference to other matters. I found in said books that there was a large arrear due by Mr. Skead for slide dues amounting to about $16,000. I then made enquiries at the Crown Timber Office as to the nature of this indebtedness, and was informed by the officials in the Crown Timber Office, and others, that Mr. Skead, as well as several other lumbermen, were then in arrears to the Dominion Government for slide dues and were petitioning or applying to the Government for an extension of time for payment of such arrears. I also found at that time that the purport of the application by such lumber-
42 EXCIIEQUER COURT REPORTS. [VOL. I. 1881 men, including Mr. Skead, for such extension was to be allowed to pay such dues by paying to the Government the rate of two dollars her thousand M FR IIA - BANx or feet, board measure, on all lumber shipped by them. I was not then made CANADA aware, nor did I know till some time afterwards, that Mr. Skead had, v• previous to that time, been paying at the rate above described of $2 THE QUEEN. per one thousand feet, board measure, on all lumber shipped on ac- Itenxonn for count of said arrears of dues. I may have seen at that time just re-Judgment. ferred to, in the books of the Crown Timber Office, that some such payments had been made by Mr. Skead, and I think that the books in said office did show some such payments. After discovering that there was an indebtedness by Mr Skead for arrears of dues, I reported it to the suppliants, and called upon Mr. Skead's book-keeper shortly afterwards for a statement of the amounts paid by Mr. Skead under the above described pro rata proposal or arrangement. I remember asking Louis Belanger, Mr. Skead's book-keeper, for a memorandum of the amounts so paid. I got this memorandum and found that it showed payments on account of those dues of which I had not previously been correctly informed. l must have known at that time that the pro rata arrangement fur payment of the arrears was in existence, and I must thus have known all about it. He adds : I must have had interviews with Mr. Skead about this pro rata arrangement, but I do not remember any special conversation with Mr. Skead about the matter. The suppliants [he adds] were very much incensed at the fact of there being the large arrears of slide dues mentioned when I reported same to diem. It appears,then,that the witness reported to his principals, the suppliants, the contents of this memorandum furnished to him by Mr. Skead's book•keeeper ; and it may reasonably be inferred that he forwarded it to them. He had had also a memorandum previously furnished him by an officer of the Crown Timber Office, but he neither gives us, with any degree of preciseness, the date of his acquiring the information which he admits he did acquire, nor do the suppliants, who must have in their possession the communication or report upon the subject made to them by their agent, and which, as he •says, so much incensed them, produce the report, or furnish the Court with any information as to its date.
VOL. L) EXCHEQUER COURT REPORTS. 43 • Under these circumstances it would not be unrea- 1881 sonable to take Mr. Kirby's evidence in a sense most ICER CHANTS strongly against the now contention of the suppliants , BANK or CANADA and that evidence, if criticised closely, would justify v. the conclusion that Mr. Kirby's enquiries at the Crown THE QUEEN: Timber Office, and the information which he admits R710."..' he obtained there, was obtained while Mr. Skead's judgment. proposal as contained in the letter of the 6th June, 1877, was as yet under the consideration of the Minister, that is, before the 5th July, 1877 ; and that the payment previously made by Mr. Skead upon the basis of that proposal, which the witness admits that he thinks he saw in the books of the department, may have been the payment made accompanying the letter of the 6th June, which was a payment calculated upon the basis of the proposition contained in that létter. The witness says :— The way I became aware of this proposal or arrangement having been made, was by finding it recorded in the books of the Crown Timber Office at Ottawa when searching there in reference to other matters. I found in said books that there was a large arrear due by Mr. Skead for slide dues, amounting to about $16,000. I then made enquiries at the Crown Timber Office as to the nature of this indebtedness, and was informed by the officials in the Crown Timber Office, and others, that Mr. Skead, as well as several other lumbermen, were then in arrear to the Dominion Government for slide dues, and were petitioning or applying to the Government for an extension of time for payment of such arrears. I also found at that time that the purport of the application by such lumbermen, including Mr. Skead, for such extension, was to be allowed to pay.such dues by paying to the Government at the rate of two dollars per thousand feet, board measure, on all lumber shipped by them. From this language it would 'seem that the time when the bank, through their agent, Mr. Kirby, became acquainted with the terms of the proposal contained in the letter of the 6th June, 1877, was while that application was under the consideration of the Government and before it was acceded to, and this •
44 , EXCHEQUER COURT REPORTS. [VOL. L 1881 view would accord with Mr. Ritchie's recollection MERCHANTS that it was in the summer of 1877, when presenting r some or one of Mr. Skead's cheques to cover the agreed CANADA V. rate of $2 per M. feet, that he gave Mr. Kirby informa - THE QIIE EN. tion of the purport of the agreement under which the RH7Ui01,£i cheque was given. But however this may be, I can have no hesitation in finding upon this evidence that the suppliants had all the information spoken of by the witness and re• lating to the subject, prior to the payment made by them for slide dues on, and subsequently to, the 25th May, 1878 ; and, therefore, long before the payment made by them of the amounts now claimed to have been paid under protest upon and subsequent to the 22nd June, 1878. I can come to no-other conclusion than that the payments made by the bank upon, and subsequently to, the 25th May, and prior to the 22nd June, 1878, were made by the suppliants with full knowledge of the terms of the agreement made in adoption of the proposal contained in Mr. Skead's letter of the 6th .Tune, 1877, and in ratification and confirmation of that agreement ; and that the protest accompanying the payments made upon, and subsequently to, the 22nd June, 1878, was merely designed, in consequence of Mr. Skead's insolvency, to evade and defeat the agreement, of which up to that date the suppliants had been willing to take, and did take, the benefit. The petition must, therefore, in my opinion, be dismissed with costs. As the suppliants have submitted and have undertaken to pay what the court should determine to be proper] y payable under the cir-stances, I think they should pay the arrears according to the account as appearing in the books of the Crown Timber Office, the correctness of which has not been disputed ; together with simple interest on the amount
VOL. I.] EXCHEQUER COURT REPORTS. 45 from time to time remaining due, and that it should be 1881 referred to the registrar of this court to determine the nit c nNTS amount in case the parties shall differ about the same ; B ANK of (i11NADA which is ordered accordingly. v. THE QUEEN. Having taken the view which I have above ex- pressed of the case, it has not been necessary for me to rot 7 consider whether, if the mortgages had been ordinary judgment. chattel mortgages with provisions for the mortgagor retaining possession and carrying on his business in the ordinary manner until default, it. would, or not, have been in his power in the interest of his business to have . made the arrangement with the Government contained in the letter of 6th. June, 1877, so as to bind the sup- pliants equally as he himself would have been bound thereby if he had continued to carry on the business and had made no default ; , whether in . fact the ar- rangement was or not proper and expedient to be made by him in the ordinary conduct of his business ; and if so, whether it was, or not, one which would be proper for a mortgagor, under a chattel mortgage framed in the ordinary way, to make so as to bind the mortgagees of the property. Petition dismissed with costs.* Solicitors for suppliants: Stewart, Chrysler 4- Gormully. Solicitors for respondents : O' Connor 8 . j Hogg. *On appeal to the Supreme Court Canada, (the suppliants in the 1882 of Canada by the suppliants, the court below) claiming as mort-judgment of Gwynue, J. in the Ex- gagees under two chattel mort - June 22. chequer Court was reversed. gages, which have been pleaded PRESENT : Sir W. J. Ritchie, C. and produced herein. J., Strong, Fournier, Henry and • The first mortgage, dated the Taschereau, JJ. 18th clay of December, 1876, con- Sin W. J. RITCHIE, C. J.—The tains th;s provision : question I am called upon to dis- [His Lordship here recites. so cuss in this case is one between the much of the said mortgage as is Dominion Government and the stated in the judgment of the appellants, the Merchants Bank of Exchequer Court on page 30].
46 EXCHEQUER COURT REPORTS. [VOL. I. 1882 The learned judge in the court be- the seizure herein, I find that .M, low found, as a matter of fact, that Skead had no authority, express MERCHANTS a collateral' agreement was made or implied, from the appellants, B CA A N N A K DA o f between the parties at the saine after the execution of the mort- v. time the first mortgage was ex- gages, to interfere with their rights THE QUEEN.ecut d, whereby the mortgagor under such mortgages by pledg• was to remain in possession of the ing the property covered thereby Ritçhle,C.a. m property and carry on the busi- for the payment of any arrears Appeal. ness of its manufacture and sale of Crown dues ; or to impo-e on for the benefit of the appllants, such property any lien, charge or and as their agent, but I have burden, other than the law had been unable to discover any evid- attached thereto, for the slidage ence of such an agreement. and boomage of that specific pro- The second mortgage dated 11th perty. .May, 1877, contains the following Nor does the evidence establish provisions : the fact that the bank knew that [His Lordship here recites so there were arrears other than on much of this mortgage as is stated the lumber mentioned in the in the judgment of the Exchequer mortgages, or that the Crown Court, on pages 32-341. claimed any lien or charge other Upon the dates when the mort- than for the slidage and boomage gages were executed it is uadis- on the logs in dispute. But, even pitted. that Skead was indebted to if the bank did know there were the appellants in the amounts arrears for slide or boom dues on intended to be secured thereby, logs previously bronaht down and that he was carrying on the busi- manufactured into lumber, such ness as usual, and that he was in knowledge would not create a the sole possession of the property charge or attach a lien for such granted by such mortgages. It is dues on other lumber than that also established by the evidence for the slidage and boomage of that Skead continued to carry on which they became due. More-his business for and on his own over, if Skead did propose, by account without change, until he any arrangement with the Crown, was macle a bankrupt by the pro- to give the Crown a charge or ceedings in ba'ikruptcy. lien for arrearages due upon other I can find no evidence, what- lumber, I can discover no suf-ever, in this case, of any contract, ficient evidence of any adoption, express or implied, creating a gen- ratification or confirmation of any eral lien or charge on the lumber such arrangement by the aFpell-in question so as to bind third ants. persons to whom the same has I find nothing in the law, or in been conveyed for valuable con- the regulations, giving the Crown sideration. any general lien for arrears or With reference to the agree- general balances, or any lien (x -ment entered into between Skead cept on the specific lumber for and the Crown upon the terms the amount due for its passage or contained in his letter to the boongage, viz.: 4 cents per log, Minister of Inland Revenue on equal to 26 cents per 1,000 ft. b.m. the 6th June, 1877, and relied up-As to usage in respect to col- on by the Crown in support of letting dues, it appears the regula-
VOL. I.] EXCHEQUER COURT REPORTS. 47 lions have become inoperative and submitted to by the mill-1882 from the fact that, as Mr. Russell owners, or enforced by the Gov- says, it is impossible to collect the eminent. MERCHANTS dues at the slides. On account of The only evidence as to usa • g e BACN AN K A DA this impossibility of enforcing the in respect of Skead's logs is found v. regulations, the Government ap- in Mr. Russell's evidence : THE QUEEN. pear to have generally allowed "- Q. Did you ever press Mr. Rit chie,C.J. logs to pass through the slides Skead for payment of arrears 1 un without a compliance with any of A. Decidedly I did. Appeal. the provisions of the regulations Q. By letter 1 in that behalf. With respect to A. By letter and verbally. Skead's logs, Mr. Russell says that Q. Was that in 1873 they were allowed to pass without A. was every year. the dues being demanded in ad- Q. From 1873 ? vance for the reason above men-A. Yes ; and before. The ac-tioned. He explains that the counts are regularly rendered and regulations were made without they are dunned. reference to the further develop- Q. In answer to these dims or ment of the slide system, and that pressures did 14Ir. Skead see you he had recommended new regala- himself ? tions to meet the requirements of A, He comes in casually. the extended system, but they ap- Q. Did you give him time for pear never to have been adopted the payment on some of his ar-by the G.vernment. Now, the rears ? officers of the Crown who were A. They all got time that way examined in this case appear to during the bad times. have been under the impression Q. You say that he has seen you that so long as there was sufficient with reference to the demands lumber in the possession of the which have been made upon him ? mill-owner to satisfy the claims of A, Yes. the Government for dues against * * * him, the Government was secured; Q. You charged these clues but I can discover no proof of any against Mr. Skead personally ? understanding or arrangement by A. Yes. which, in consequence of logs Q: You charged these clues as an being allowed to come through. ordinary debit, did you not? the slides without the regulations A. Yes ; from the beginning. being complied with, any general * * * * lien should attach to them at the Q. After June, 1887, did he mills. Nor do I find any in- continue his business up to the stance where the Government time of his bankruptcy ? asked, or that the mill-owners A. 'Yes. generally, or any one of them in Q. Had he made shipments of particular, agreed that any such lumber during that time lien should attach to lumber A. I am not aware. I have no manufactured at the mills ; and record of them. The railway takes no evidence was given of any away lumber. I think there were occasion where such a general lieu arrangements for sales made in was claimed by the Government 1877, some of them were carried
48 EXCIHEQUER COURT REPORTS. {VOL. I. 1882 out afterwards, I know. I do not Q. But there was ' nothing said know whether they were all or to Mr. Skead about it? MERCHANTS not BANKOF A. 11Te talked about the Tian- Q CANADA Up to Mr. Skead's bank- tity there. . We would not be so v. ruptcy, or the time that the bank strict in his case as in others. Tap QuEEN.took possession, did he carry on Q. You have already stated :— his business as he bad previously "The letter dated 6th June, Rite] e,c.J, ou done ? 1877, was received by me from Appeal. A. Apparently as usual, he gave Mr. Skead. This letter contains cheques and these cheques were the t grins of the only arrange- received. ment proposed by Mr. Skead for Q. Were you aware of the mort- the settlement of his arrear dues to gages which the bank had obtain- the Crown, and this arrangement ed ? was agreed to by the Crown, hay- A. Not then. ing been first reported favorably Q. When did you first become on by me, as appears by my letter aware of the mortgages of the of 2nd July, 1877, now marked as bank ? exhibit `G.' That letter is now filed A. I forget. as petitioners' exhibit, number Q. Was it after the bankruptcy ? eleven." You continue :— A. Yes; I think so. "I do not know of any other Q. The only arrangement that arrangement having been made by you had with Mr. Skead was that Mr. Skead as to the payment of contained in the letter of the 6th his arrears, and no other arrange- June ? ment was made with me in refer- A. It was the only explicit ar- ence to the said arrears." rangement as to what he was to That is correct is it not? pay. A. Yes ; that is the only special Q. You had no other arrange- arrangement made. ment except that one î Q. I will read further :— A. No other special arrange- " I did not consider that Mr. ment. Skead had made any Special ar- Q. Had you any other arrange- rangement to pay those dues apart ment at all ? from his obligation to pay under A. No ; except a perfect under- the regulations, until his arrange-standing that the timber was liable ment already referred to with the to seizure. That was the reason Minister of Inland Revenue." that all the luniberers always A. That is what I have been showed me that they had plenty saying to you. left. Q. Then you say here Q. Was there anything said be-"Mr. Skead never made any tween you and Mr. Skead about verbal arrangement with me for the timber being liable to seizure ? the payment of clues." A. It would not be discussed by A. I would not admit any ver- any lumberer. When they give bal arrangement. me memoranda showing there is Q. You understand your duties enough left to cover all their in- too well for that ; you would not debtedness, it means that there is do anything so unofficial ? enough there to seize. A. No ; there would be a great
VOL. I.] EXCHEQUER COURT REPORTS. 49 deal said backward and forward, Skead's proposition to the Com-1882 of course. missioner. -v-~ Q. But when you got to the Q. What proposition? MERCHANTS of basis of an agreement you would, A. The proposal of June, 1877. B Nx CA NADA of course, put that in writing ? The matter was referred to me for v. A. It was not for me to decide report. THE QUEEN. upon. We would talk about the Q. That is the one in which he • usual business, and there would be is to pay two dollars per thousand Itjt olOIL~ ,~.~. the fact that there was plenty feet ? App' eal.. there to secure the Government A. Yes, pro rata. that we could, in my opinion, Q. You went to the mills to see take possession of. The quantities if there was sufficient security ? of timber that they had on hand A. Yes. were always made the basis of de- Q. Security °for what ? • lay in cases of that kind,—the fact A. For the whole sum due on that there was eno ugh for the Gov- the whole material sawn and un-crnment to take. its arrears upon. sawn. The rate at the pro rata Q. Was a seizure made to en- would cover his indebtedness. force arrears immediately, or was Q. Was there anything said or it left in abeyance ? understood between you and Mr. A. It had been left in abeyance Skead with reference to rights of on various grounds. action of the Crown in case he Q. Will you state what was the made default in payments arrangement with Mr. Skead, or A. It was never talked of. All that the understanding with him, with was asked was that they should reference to the security of the have enough stock on hand to Crown for the payment of arrears ? cover the demand of the Crown." A. Mr. Skead desired me to go What does all this go to show up and look at the timber and see but that so long as Skead app, ar-if there was ample security there. ed to have sufficient property on He drove me up, and I saw that hand to cover the demand of the there was ample security. Taking Government, the officers of the into consideration the state of his Crown were willing to trust him business and the number of logs upon the understanding that the that he had, I believe that he was timber arriving at different times justified in saying that, if the busi- at the mills was liable to seizure ness had gone on, he could have for the specific amount of dues met all his obligations. payable thereon ? Certainly- it is Q. When was this ? On more no evidence of any understanding than one occasion ? or usage that the timber at the mills A. Not more than one occasion at any given time was liable for specifically that way, though I the arrears of dues for timber have often been there. I was passed in years gone by. satisfied that the proposition which But, if Mr. Russell's evidence is he made was a reasonable one. to be relied on, the Crown officers, Q. (By the Court). When was as a matter of fact, did not, in this this ? case, act on the supposition that • A. Before recommending Mr. any charge on the lumber existed 4
50 EXCHEQUER COURT REPORTS. [VOL. I. 1882 because he says (ante p. 47) these within the Province where timber, clues were charged against Skead or the owner of it, was to be found MERCHANTS personally, and as an ordinary —it is all in the statutes. BANK O CANADA debt from the beginning ; and he Q. I should like to see the V. makes it clear that the timber w. s statute which you think gave you THE QUEEN.not seized under, or by virtue of, the right ? any claim or lien arising from any A. There are the old Consoli- RIteliie C.a. understanding, usage or contract, dated Statutes and the new act, APPeaJ. for he distinctly says that he had 31 Victoria, chapter 12, section 61, no authority for making the seiz- sub-section 3.' ure except the authority contain-Q. Is that all ? eel in the regulations and statutes. A. Yes ; that is all the act men- Upon this point Mr. Bussell tions about slide clues." speaks as follows in his direct Whether the Government, in examination :— proceeding to enforce their claim "Q. If Mr. Skead had not made (whatever may have been their this arrangement to pay two dol- legal rights), assuming their refusal lars per thousand on the arrears due to comply with Mr. Skead''s pro-by him, what course would the posal as to payment of slide dues, Government have pursued with would have precipitated Mr. reference to his stuff? Skead's insolvency or not, and A. If he had deferred too long whether such an event would have I would have taken possession of been so prejudicial to the appel his lumber anywhere in the Pro- lants as to warrant Skead in vince. I have done it in other making the arrangement he did cases. in their interest, as suggested Q. Mr. Skead was aware of that? by the learned judge in the A. Yes. I had been in the habit court below, are matters of and practice of doing so. I have mere surmise, and matters con-seized lumber on the Richelieu, cerning which I have no right going out of the country. I held to speculate. But even if we myself justified on account of the accept the learned jadge's con-law and regulations to seize for the elusions in this behalf, they can- slide dues." not affect the question upon which And in cross-examination upon the whole case turns. Either this point :— Skead had, or had not, authority "Q. You say that you thought to bind the appellant's property those regulations enabled you to by the agreement he entered into seize for slide dues in any part of with the Government. If he had the Province ? not, the agreement is not available A. Yes. to the Crown. I think it is clear Q. You say that those regula- from the evidence that he had no tions gave you the same powers such authority, and, such being the as to dues to be collected for the case, we have no right to say that Ontario Government ? he ought to have had, or that what A. No ; I said I thought inas- was clone was for the appellants' much as there were statutes of the benefit, and, therefore, they must Board of Works which provided he bound by it. for timber being seized anywhere I am of opinion that the fair in-
VOL. L] EXCT-TEQUER COURT REPORTS. 51 tent and meaning of the second position to create, by agreement or 1882 mortgage, and of the special pro- otherwise, a charge on such lum- visions contained therein, was to ber to take precedence of the mort-14IERegexms NA of enable Skead to carryon his busi- g g a a g g e e s. The Chattel M M o o rt r g tg a a g g e e Act C C A iANAAA ness as usual in a proper and cliff- would be of little avail if the v. cient manner to the best advan- agreement put forward by the THE QUEEN.. tage to himself, and in order to Crown in this case should prevail !.iitolite,C. J. secure the rapid realization of to cut down a security in refer- on funds for the liquidation of his ence to which all the provisions Appeal* indebtedness, and not as the agent of that act had been complied of the appellants. It appears to with. me that the transaction was in no I am of opinion to allow the sense that of principal and agent, appeal with costs. but of debtor and creditor, in which the debtor by mortgage, by Per HENRY, J.—There is noth- way of collateral security, trans- ing in the evidence to show an inferred property to his creditor, tention on the part of either Skead and agreed to retain possession or the officers of the Crown that thereof and so deal with it that its there should be any substitution value should be realized in such a of logs subsequently coming down manner as to secure to the credi- to the mills for the logs upon. tor the proceeds in payment of his which a lien would have rested in debt; the surplus, if any, being for virtue of the original agreement the benefit of the mortgagor. between them; and in the absence I can find nothing in the evid- of an express contract or stipula-ence to justify mein saying that the tion to that effect, the court on appellants, in the business carried appeal is bound to hold that no on by Skeadin conuectionwith this lien attached to other than the lumber, were trading as principals specific property in respect of and put forward Skead as the which such lien was created. ostensible trader, when, in reality, he was only their agent. Per FOURNIER, J.---Without giv- I cannot understand how Skead, ing any decided opinion upon the having mortgaged certain pro- effect of sec. 71 of 31 Vic., c. 12, perty to the bank, could after• in respect to continuing in force wards, without the consent of the under that statute regulations bank, give any other lien or secu- made under chapter 28, Consoli-rity thereon to the Crown for dated Statutes of Canada, such arrears of slidage dues upon other regulations might be looked at in property, in resp , et of which the order to ascertain the amount of indebtedness to the Crown was dues which could be claimed under his own and not that of the bank, them; because the appellants could and where the effect of such lien not, at the same time, admit and would be simply to give the Crown deny the validity of such regula-a preferental claim against the tions. The offer macle by them to property, and so cut out the bank's pay to the Crown the sum of security. Flaying transferred his $1,500, as being the only amount property in the lumber by way of. of dues owned to the Crown on mortgage, surely he was not in a the lumber in question, is',cer- 4%
52 EXCHEQUER COURT REPORTS. [VOL. I. 1882 tainly incompatible with their value of the services rendered. contention that the regulations, in In tendering the sum of $1,500, M ERCHANTS virtue of which this sum was clue, the appellants virtually admitted DANK. OF were no longer in force. But, that something was justly due to CA venn admitting this contention to be the Government, if not legally due, THE QuEEN.well founded in law, the logs in in virtue of the regulations. question having passed through Fournn'i r, J. slides which are the property of STRONG and TASCFIEREAII, JJ. Appeal. the Government, there would still dissented. — be due to r the Government the Appeal allowed with costs.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.